Central Garden & PET Co.: Q3 FY2026 earnings call

What management said about Q3 FY2026, from the documents filed with the SEC on 5 August 2026: press release. Guidance figures: 1 raised, 1 lowered. The quarter’s numbers.

Read the filing

Key takeaways

• Organic sales rose despite net decline: Reported net sales were $882 million versus $961 million, down 8%. Excluding the pet distribution exit, organic net sales were $862 million, up 2% from $842 million. Source
• Non-GAAP EPS slightly lower year on year: Non-GAAP net income was $96 million. Non-GAAP diluted EPS was $1.54 versus $1.56. GAAP diluted EPS was $1.45 versus $1.52. Source
• Pet organic sales up 2%: Pet segment net sales were $400 million versus $493 million, down 19% on the pet distribution exit. Organic Pet net sales rose 2% to $380 million. Source
• Pet distribution moved into partnership: A new pet distribution partnership with Phillips was set up after Q2. Central keeps a 20% stake, and the business runs under the Phillips brand.
• Guidance excludes further deals and refunds: Guidance excludes further acquisitions, divestitures or restructuring in the rest of fiscal 2026, including Cost and Simplicity projects, and further tariff refunds. Source
• TRIXIE price up to €400 million: Terms are €340 million in cash at closing plus up to €60 million of earn-out payments, for total consideration of up to €400 million for an 80% interest. Source
• Scale in European pet specialty: Management says the deal gives Central about 10% of net sales outside the United States and a platform to consolidate the fragmented European pet specialty market. Source

“Third quarter results showed continued strength across the business with improvements in both organic sales and margins versus last year, reflecting sharp execution and favorable margins due primarily to the exit of the pet distribution business earlier this year.”

Niko Lahanas, CEO of Central Garden & Pet

Guidance

What changed from last quarter

• Guidance raised: Fiscal 2026 non-GAAP diluted EPS guidance raised to $2.85 or better from $2.70 or better. Source
• Guidance lowered: Capital expenditure estimate for fiscal 2026 narrowed to approximately $50 million from $50 million to $60 million. Source
• New: After quarter end, Central agreed to buy an 80% interest in TRIXIE for up to €400 million in total consideration. Source
• Ended: Management cited the exit of the pet distribution business as a driver of the quarter's margins. Source

Quarter results and earnings per share

• Organic sales rose despite net decline: Reported net sales were $882 million versus $961 million, down 8%. Excluding the pet distribution exit, organic net sales were $862 million, up 2% from $842 million. Source
• Gross margin widened 130 basis points: Gross profit was $317 million versus $332 million, down 5%. Gross margin rose to 35.9% from 34.6%. Source
• Non-GAAP EPS slightly lower year on year: Non-GAAP net income was $96 million. Non-GAAP diluted EPS was $1.54 versus $1.56. GAAP diluted EPS was $1.45 versus $1.52. Source
• Non-GAAP operating margin up 90 basis points: Non-GAAP operating income was $136 million versus $139 million, with margin rising to 15.4% from 14.5%. GAAP operating income was $126 million, down 7%. Source
• Adjusted EBITDA margin up 100 basis points: Adjusted EBITDA was $162 million versus $167 million, with margin rising to 18.3% from 17.3%. Source

Segment results: Pet and Garden

• Pet organic sales up 2%: Pet segment net sales were $400 million versus $493 million, down 19% on the pet distribution exit. Organic Pet net sales rose 2% to $380 million. Source
• Pet margins higher on both measures: Pet non-GAAP operating margin was 19.0% versus 15.8%. Pet adjusted EBITDA margin was 21.4% versus 17.9%. Source
• Garden sales grew on three product lines: Garden segment net sales were $482 million versus $468 million, up 3%. Management named Wild Bird, Fertilizer and Controls, and Grass Seeds as the main drivers. Source
• Garden non-GAAP operating margin up 70 basis points: Garden non-GAAP operating income was $91 million versus $85 million, with margin of 18.9% versus 18.2%, excluding a $0.8 million facility closure charge. Source

“As we enter the final phase of the garden season, and given the strength we've seen across the business, we're raising our fiscal year outlook.”

Niko Lahanas, CEO of Central Garden & Pet

Pet distribution exit and partnership

• Pet distribution moved into partnership: A new pet distribution partnership with Phillips was set up after Q2. Central keeps a 20% stake, and the business runs under the Phillips brand.
• Gain on partnership contribution: Other income included a $2.5 million gain from contributing the pet distribution business to the new partnership, excluded from non-GAAP results. Source
• TRIXIE serves large retail store base: TRIXIE serves over 30,000 pet retail stores internationally. Approximately 90% of its portfolio is own-brand. Source

Costs and one-time items

• Non-GAAP SG&A down 6%: SG&A was $191 million versus $197 million, down 3%. Non-GAAP SG&A was $182 million versus $193 million, down 6%. Source
• Facility charges excluded from non-GAAP: Charges of $13.8 million covered the Pet exit of a minor business, two Pet facility closures, and three Garden distribution center closures. These were excluded from non-GAAP results. Source
• Tariff refunds added Pet income: Pet segment income included $3.6 million of tariff refunds received, which were excluded from non-GAAP results. Source

Fiscal 2026 guidance and assumptions

• Guidance excludes further deals and refunds: Guidance excludes further acquisitions, divestitures or restructuring in the rest of fiscal 2026, including Cost and Simplicity projects, and further tariff refunds. Source
• Retail and consumer conditions assumed: Guidance assumes a competitive and promotional retail environment, a value-oriented consumer, existing tariffs, and inflation in select commodities. Source
• Capex focused on growth and maintenance: Capital expenditures are described as focused on maintenance, productivity initiatives, and targeted growth investments across both segments. Source

Cash and capital returns

• Operating cash flow higher on working capital: Cash provided by operations was $327 million versus $265 million, which management attributed primarily to seasonal changes in working capital. Source
• Cash balance rose to $997 million: Cash and cash equivalents were $997 million at June 27, 2026, versus $713 million a year earlier. Source
• Gross leverage below target range: Gross leverage was 2.8x versus 2.9x a year earlier, below the 3.0x to 3.5x target range. Net leverage was 0.5x. Total debt was $1.2 billion. Source
• Repurchase capacity held at $128 million: Remaining authorization for stock repurchases was $128 million at June 27, 2026, the same amount reported at March 28, 2026. Source

TRIXIE acquisition and strategy

• TRIXIE price up to €400 million: Terms are €340 million in cash at closing plus up to €60 million of earn-out payments, for total consideration of up to €400 million for an 80% interest. Source
• Scale in European pet specialty: Management says the deal gives Central about 10% of net sales outside the United States and a platform to consolidate the fragmented European pet specialty market. Source
• TRIXIE leaders to keep stake: Members of TRIXIE's leadership team will hold a minority stake and continue in key roles after the transaction. Source

Coming up, as management said on 5 August 2026

• TRIXIE closing expected in first half: Management expects the TRIXIE transaction to close in the first half of fiscal 2027. Source
• Results call held the same day: Management said it would host the call at 4:30 p.m. Eastern Time with CEO Niko Lahanas and CFO Brad Smith. Source

Risks management discussed

• Demand: Management names a competitive and promotional retail environment and a value-oriented consumer as current conditions in its planning. Source
• External: Management assumes continued stability in key commodities despite a dynamic macroeconomic and geopolitical backdrop. Source
• Regulatory: Refunds of $3.6 million on tariffs deemed unconstitutional were received this quarter, and existing tariffs remain an assumption in guidance. Source

Other quarters

• Q2 FY2026 earnings call
• Q1 FY2026 earnings call
• Q4 FY2025 earnings call
• Q3 FY2025 results

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.